Although the notion of "early intervention" sounds prudent and responsible, it actually raises quite difficult policy issues. In short, what are the circumstances under which the government should assert control over a bank that is in current compliance with applicable capital regulations? When it does so, is there any reason to believe that the regulators will run the troubled bank more successfully than current management? Is it even possible to establish procedures that are not…

Mr. Dudley suggests that senior bank executives should be partially liable for any fines paid by the bank, apparently without regard for the need to prove any wrongdoing on the part of the executives. That does not seem quite fair, and it would certainly provide a remarkable "incentive" (to use Mr. Dudley's terminology) for experienced individuals to decide that they would not want to be senior bank executives.

FINRA's recent rule change imposing margin requirements on TBAs and other transactions has brought to light questions about the financial relationships between introducing firms, their customers, and clearing firms. It is not clear that the regulated parties, or the regulators themselves, fully understand the relationships. That said, the path to improvement may be less about amending the rules than it is about making sure that the rules are clearly communicated and understood. Introducing…

According to the summary of the GAO report:

"The U.S. regulatory structure poses challenges to fintech firms. With numerous regulators, fintech firms noted that identifying the applicable laws and how their activities will be regulated can be difficult."

A great part of the problem is the prevailing Dodd-Frank notion that more rules, more agencies and more overlapping authority means that the market is safer. The reality is that, in many cases, it…